On November 10, 2023, Unit Corporation (OTCQX: UNTC) (Company) filed unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2023 with OTC Markets Group Inc. (OTC). The Company’s current, quarterly, and annual reports may be accessed on the OTC’s website at https://www.otcmarkets.com/stock/UNTC/disclosure, as well as the Company’s website at https://unitcorp.com/investor-relations/otc-sec-filings/.
Third Quarter Results
Net income attributable to Unit Corporation for the three months ended September 30, 2023 was $28.8 million, or $2.94 per diluted share, compared to $55.8 million, or $5.60 per diluted share, for the three months ended September 30, 2022. Total revenues for the three months ended September 30, 2023 was $80.2 million, compared to $120.3 million for the three months ended September 30, 2022.
For the nine months ended September 30, 2023, net income attributable to Unit Corporation was $191.5 million, or $19.55 per diluted share, compared to $89.0 million, or $8.79 per diluted share, for the nine months ended September 30, 2022. Total revenues for the nine months ended September 30, 2023 was $252.7 million, compared to $443.2 million for the nine months ended September 30, 2022.
Phil Frohlich, the Company’s Chief Executive Officer, commented, “We continue to return value to our shareholders with a dividend paid during the quarter of $2.50 per share while also maintaining a strong cash position of $206.6 million. We believe our recently announced agreement to sell certain properties in the Texas Panhandle furthers our approach of streamlining our operations and maximizing the value of our assets.”
Operational highlights for the oil and natural gas and contract drilling segments during the three and nine months ended September 30, 2023 and 2022 include:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
| 2023 | 2022 | % Change | 2023 | 2022 | % Change | ||||||||||||
| Oil and Natural Gas: | |||||||||||||||||
| Avg. oil price ($/Bbl) | $ | 60.33 | $ | 56.75 | 6 | % | $ | 61.55 | $ | 57.82 | 6 | % | |||||
| Avg. oil price excl. derivatives ($/Bbl) | $ | 80.83 | $ | 91.81 | (12 | )% | $ | 75.19 | $ | 97.74 | (23 | )% | |||||
| Avg. NGLs price ($/Bbl) | $ | 17.79 | $ | 29.39 | (39 | )% | $ | 17.95 | $ | 32.46 | (45 | )% | |||||
| Avg. NGLs price excl. derivatives ($/Bbl) | $ | 17.79 | $ | 29.39 | (39 | )% | $ | 17.95 | $ | 32.46 | (45 | )% | |||||
| Avg. natural gas price ($/Mcf) | $ | 1.75 | $ | 3.57 | (51 | )% | $ | 2.44 | $ | 3.72 | (34 | )% | |||||
| Avg. natural gas price excl. derivatives ($/Mcf) | $ | 1.78 | $ | 7.04 | (75 | )% | $ | 2.08 | $ | 6.02 | (65 | )% | |||||
| Oil production (MBbls) | 225 | 276 | (18 | )% | 775 | 991 | (22 | )% | |||||||||
| NGL production (MBbls) | 429 | 547 | (22 | )% | 1,277 | 1,781 | (28 | )% | |||||||||
| Natural gas production (MMcf) | 5,185 | 5,452 | (5 | )% | 15,741 | 18,788 | (16 | )% | |||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
| 2023 | 2022 | % Change | 2023 | 2022 | % Change | ||||||||||||
| Contract Drilling: | |||||||||||||||||
| Drilling rigs available (end of the period) | 14 | 21 | (33 | )% | 14 | 21 | (33 | )% | |||||||||
| Average drilling rigs in use | 14.1 | 17.0 | (17 | )% | 15.5 | 16.3 | (5 | )% | |||||||||
| Average dayrate on daywork contracts ($/day) | $ | 32,572 | $ | 23,371 | 39 | % | $ | 31,220 | $ | 21,550 | 45 | % | |||||
| BOSS rigs average dayrate ($/day) | $ | 32,642 | $ | 24,258 | 35 | % | $ | 32,210 | $ | 22,378 | 44 | % | |||||
| SCR rigs average dayrate ($/day) | $ | 20,724 | $ | 19,370 | 7 | % | $ | 22,944 | $ | 17,900 | 28 | % | |||||
Common Stock Dividends
The table below presents information about the dividends paid during the periods indicated:
| Type | Dividend per share | Total Amount | Record Date | Payment Date | |||
| 2023 | (In thousands) | ||||||
| First quarter | Special | $ | 10.00 | $ | 96,131 | January 20, 2023 | January 31, 2023 |
| Second quarter | Quarterly | $ | 2.50 | $ | 24,071 | June 16, 2023 | June 26, 2023 |
| Third quarter | Quarterly | $ | 2.50 | $ | 24,113 | September 15, 2023 | September 26, 2023 |
On August 10, 2023, the Company announced approval of a quarterly dividend of $2.50 per share for the fourth quarter of 2023. The record and payment date for the fourth quarter dividend will be determined at a later date.
The declaration and payment of any future dividend, whether fixed, special, or variable, will remain at the full discretion of the Company’s Board of Directors and will depend upon the Company’s financial position, results of operations, cash flows, capital requirements, business conditions, future expectations, the requirements of applicable law, and other factors that the Company’s Board of Directors finds relevant at the time of considering any potential dividend declaration. Future dividends are expected to be funded by cash on the Company’s balance sheet.
Oil and Natural Gas Divestiture
On October 24, 2023, the Company entered into an agreement to sell certain wells and related leases in the Texas Panhandle for a purchase price of $55.0 million, subject to customary closing and post-closing adjustments based on an effective date of October 1, 2023. The sale is expected to close during the fourth quarter of 2023.
About Unit Corporation
Unit Corporation is a Tulsa-based, publicly held energy company engaged through its wholly-owned subsidiaries in oil and gas production and contract drilling. For more information about Unit Corporation, visit its website at http://www.unitcorp.com.
Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act. All statements, other than statements of historical facts, included in this release that address activities, events, or developments that the Company expects, believes, or anticipates will or may occur are forward-looking statements. Several risks and uncertainties could cause actual results to differ materially from these statements, including changes in commodity prices, the productive capabilities of the Company’s wells, future demand for oil and natural gas, future drilling rig utilization and dayrates, projected rate of the Company’s oil and natural gas production, the amount available to the Company for borrowings, its anticipated borrowing needs under its credit agreements, the number of wells to be drilled by the Company’s oil and natural gas segment, the potential productive capability of its prospective plays, and other factors described occasionally in the Company’s publicly available OTC and SEC reports. The Company assumes no obligation to update publicly such forward-looking statements, whether because of new information, future events, or otherwise.
| Unit CorporationSelected Financial Highlights (Unaudited) | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| (In thousands except per share amounts) | |||||||||||||||
| Revenues: | |||||||||||||||
| Oil and natural gas | $ | 35,205 | $ | 80,026 | $ | 114,407 | $ | 257,748 | |||||||
| Contract drilling | 44,951 | 40,256 | 138,259 | 102,780 | |||||||||||
| Gas gathering and processing | — | — | — | 82,673 | |||||||||||
| Total revenues | 80,156 | 120,282 | 252,666 | 443,201 | |||||||||||
| Expenses: | |||||||||||||||
| Operating costs: | |||||||||||||||
| Oil and natural gas | 16,823 | 21,235 | 49,211 | 72,329 | |||||||||||
| Contract drilling | 27,629 | 25,823 | 81,383 | 77,823 | |||||||||||
| Gas gathering and processing | — | — | — | 62,388 | |||||||||||
| Total operating costs | 44,452 | 47,058 | 130,594 | 212,540 | |||||||||||
| Depreciation, depletion, and amortization | 4,778 | 3,521 | 12,493 | 20,452 | |||||||||||
| General and administrative | 4,952 | 5,601 | 14,851 | 19,548 | |||||||||||
| Gain on disposition of assets | (4,149 | ) | (2,158 | ) | (13,578 | ) | (6,399 | ) | |||||||
| Total operating expenses | 50,033 | 54,022 | 144,360 | 246,141 | |||||||||||
| Income from operations | 30,123 | 66,260 | 108,306 | 197,060 | |||||||||||
| Other income (expense): | |||||||||||||||
| Interest income | 2,872 | 811 | 7,055 | 973 | |||||||||||
| Interest expense | (41 | ) | (37 | ) | (121 | ) | (408 | ) | |||||||
| Gain (loss) on derivatives, net | (3,239 | ) | (12,381 | ) | 11,856 | (73,848 | ) | ||||||||
| Gain (loss) on change in fair value of warrants | — | — | — | (29,323 | ) | ||||||||||
| Loss on deconsolidation of Superior | — | — | — | (13,141 | ) | ||||||||||
| Gain on sale of Superior investment | — | — | 17,812 | — | |||||||||||
| Reorganization items, net | (12 | ) | (48 | ) | (163 | ) | (90 | ) | |||||||
| Other, net | (146 | ) | 1,213 | 13 | 1,983 | ||||||||||
| Total other income (expense) | (566 | ) | (10,442 | ) | 36,452 | (113,854 | ) | ||||||||
| Income before income taxes | 29,557 | 55,818 | 144,758 | 83,206 | |||||||||||
| Income tax expense (benefit), net: | |||||||||||||||
| Current | 532 | — | 881 | — | |||||||||||
| Deferred | 190 | — | (47,625 | ) | — | ||||||||||
| Total income tax expense (benefit), net | 722 | — | (46,744 | ) | — | ||||||||||
| Net income | 28,835 | 55,818 | 191,502 | 83,206 | |||||||||||
| Net loss attributable to non-controlling interests | — | — | — | (5,828 | ) | ||||||||||
| Net income attributable to Unit Corporation | $ | 28,835 | $ | 55,818 | $ | 191,502 | $ | 89,034 | |||||||
| Net income attributable to Unit Corporation per common share: | |||||||||||||||
| Basic | $ | 2.98 | $ | 5.70 | $ | 19.81 | $ | 8.94 | |||||||
| Diluted | $ | 2.94 | $ | 5.60 | $ | 19.55 | $ | 8.79 | |||||||
| Unit CorporationSelected Financial Highlights (Unaudited) – Continued | |||||
| September 30, 2023 | December 31, 2022 | ||||
| Balance Sheet Data: | (In thousands) | ||||
| Cash and cash equivalents | $ | 206,645 | $ | 213,975 | |
| Current assets | $ | 265,331 | $ | 275,469 | |
| Total assets | $ | 501,060 | $ | 469,255 | |
| Current liabilities | $ | 51,111 | $ | 68,232 | |
| Long-term debt | $ | — | $ | — | |
| Other long-term liabilities | $ | 34,866 | $ | 33,362 | |
| Total shareholders’ equity attributable to Unit Corporation | $ | 410,743 | $ | 362,626 | |
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